December sets housing records led by secondary cities

Four new records were set during a historic December for the housing market, according to Remax.

The number of for-sale properties plummeted 17.9% month-over-month and 33% year-over-year, reaching a new December low that hasn’t been hit since Remax started its National Housing Report in 2007. National inventory decreased to 1.8 months in December from 2.1 in November and 3.9 months a year earlier. Among the 53 largest metro areas, Boise, Idaho, continues to have the lowest inventory at 0.6 months. Now in a tie with Albuquerque, N.M., Salt Lake City followed with 0.7 months. A 6-month supply defines market equilibrium.

Homes flew off the market at breakneck speeds, with the average listing-to-sale time falling to the lowest level ever for a December. Homes spent 37 days on market during the final month of 2020, up slightly from 36 in November but down from 53 the year prior. Omaha, Neb., had the fewest days at 17, followed by Boise and Cincinnati, both at 19. Des Moines, Iowa, Miami, and New York had the slowest churn with averages of 93, 84 and 71 days on market, respectively.

Secondary and tertiary markets, like Boise, keep appearing at the top of these lists due to an influx of consumers.

“Just since July, we have gotten this onslaught of 500% more out-of-staters than we’re used to, and there’s no human way the builders can catch up. They were already behind about 10,000 housing units since the last recession,” Suzi Boyle, loan specialist and branch manager at Castle & Cooke Mortgage in Boise, said in an interview.

Prices continue upward growth, driven by the demand created by historically small inventory and minuscule mortgage rates. The median sales price reached $290,000 in October, holding steady from November while rising 9.4% annually. Augusta, Maine, led all markets with a 26.6% price growth from December 2019. Boise followed in second place, up 23.8% and Detroit’s 19.2% came in third. Meanwhile, none of the largest 53 housing markets declined year-over-year.

“You have the coastal towns all through California, Seattle and Portland having gotten so expensive, that someone making $100,000 a year can’t afford to live there anymore. But Boise’s close enough to the Pacific Northwest or a one-and-a-half-hour flight to anywhere in California,” Boyle said. “A lot of millennials couldn’t see themselves ever achieving their dreams of great homeownership where they were. That, combined with COVID accelerated it because now people all over the place have an option to work from home and made it accessible to the middle class, young people and retirees.”

Closed sales in December jumped 6.2% from November and 21.9% from a year ago. Los Angeles paced all metros in sales growth with a 42.7% annual increase, followed by 40.6% in New York and 39% in Hartford, Conn. Typically a quieter month for sales, December boasted the fifth-highest volume for 2020 and bested all but two months in 2019.

“Many people want to own their home, not rent, and the low interest rate environment is helping them do it,” Adam Contos, Remax CEO, said in the report. “We expect to see more sellers enter the market this year as they take advantage of the favorable conditions and the greater mobility of working remotely. That, along with gains in construction, would help create more options for buyers, leading to what could be a very big year for sales.”